Applicable Act: The Competition Act, 2002 (The Act)
ALLEGATIONS
The informant submitted an application before the defendant seeking inter alia quashing and setting aside of the Director General's report to the extent it pertains to the alleged violation of Section 4 of the Act and the orders passed by the defendant considering the said report, primarily on the ground that investigation into the alleged violation of Section 4 of the Act was beyond the scope of the powers of the Director General (DG).
The said application was dismissed by the defendant and the informant moved the High Court.
BRIEF OF FACTS
The defendant on consideration of information and after forming a prima facie opinion that there existed a case to direct the DG to cause an investigation into the matter regarding the manufacturers of Man Made Fibres (MMF) that imposed several restrictions on Indian Textile Industry, which were their customers for purchase of MMF, and such restrictions constituted anti-competitive actions, ordered the DG to investigate and file a report for the same pertaining to contravention of provisions of Section 3(3)(a)(b)(c) of the Act.
During the investigation, the DG was informed about the informant, who was the only manufacturer of VSF in the country on account of its dominant position in the market of Viscose Staple Fibre (VSF), of indulging into various anti-competitive practices. The DG on his own decided to investigate into these issues as well and submitted the report to the defendant accordingly.
As per the report, there was no violation of the said provisions either by MMF or the informant. But the informant being a dominant enterprise was found to have abused its dominant position in the VSF market, thereby contravening Sections 4(2)(a) and 4(2)(b) of the Act.
CONCLUSION
The formation of opinion by the defendant and direction to cause an investigation to be made by the DG is a pre-requisite condition for initiation of investigation, the DG would have no power to undertake investigation in respect of the complaint the defendant did not consider while forming an opinion and directing investigation by the DG. Such an act on part of the DG shall be ultra vires his power under the Act and therefore, clearly illegal.
The report of the DG is to be confined to the allegations made in the information or the reference received by the defendant and he is not competent to travel outside the said information or reference.
DECISION
Considering the above facts, the High Court is of the opinion that the writ petition be disposed of with the direction that the report of the DG, to the extent that it included the findings specifying the contravention of the provisions of Section 4 of the Act by the informant by misuse of its dominant position as a VSF manufacturer. The defendant, if on consideration of the said part is of the opinion that there exists a prima facie case of contravention of the procedure of Section 4 of the Act by the informant shall proceed accordingly.
The said application was dismissed by the defendant and the informant moved the High Court.
BRIEF OF FACTS
The defendant on consideration of information and after forming a prima facie opinion that there existed a case to direct the DG to cause an investigation into the matter regarding the manufacturers of Man Made Fibres (MMF) that imposed several restrictions on Indian Textile Industry, which were their customers for purchase of MMF, and such restrictions constituted anti-competitive actions, ordered the DG to investigate and file a report for the same pertaining to contravention of provisions of Section 3(3)(a)(b)(c) of the Act.
During the investigation, the DG was informed about the informant, who was the only manufacturer of VSF in the country on account of its dominant position in the market of Viscose Staple Fibre (VSF), of indulging into various anti-competitive practices. The DG on his own decided to investigate into these issues as well and submitted the report to the defendant accordingly.
As per the report, there was no violation of the said provisions either by MMF or the informant. But the informant being a dominant enterprise was found to have abused its dominant position in the VSF market, thereby contravening Sections 4(2)(a) and 4(2)(b) of the Act.
CONCLUSION
The formation of opinion by the defendant and direction to cause an investigation to be made by the DG is a pre-requisite condition for initiation of investigation, the DG would have no power to undertake investigation in respect of the complaint the defendant did not consider while forming an opinion and directing investigation by the DG. Such an act on part of the DG shall be ultra vires his power under the Act and therefore, clearly illegal.
The report of the DG is to be confined to the allegations made in the information or the reference received by the defendant and he is not competent to travel outside the said information or reference.
DECISION
Considering the above facts, the High Court is of the opinion that the writ petition be disposed of with the direction that the report of the DG, to the extent that it included the findings specifying the contravention of the provisions of Section 4 of the Act by the informant by misuse of its dominant position as a VSF manufacturer. The defendant, if on consideration of the said part is of the opinion that there exists a prima facie case of contravention of the procedure of Section 4 of the Act by the informant shall proceed accordingly.
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